I do not recommend investing heavily in other cryptocurrencies except Bitcoin$BTC and Ethereum$ETH . The investment ratio of a single currency should be controlled at most between 1/5 and 1/3 of the total position. In other words, you should hold at least three or more coins when you have a full position.
Many people asked me, isn't the contribution of diversified investment in several coins the same as holding only one coin? So, what is the significance of splitting positions? If you are extremely optimistic about a coin, can you hold a large or even full position?
My answer is: No.
The core purpose of diversified investment is to prevent extreme risks with a small probability. "Black swan" events often occur in the stock market. Even large companies may suddenly break out of fraud or bankruptcy, causing stock prices to plummet. The risks in the currency market are even more dangerous. As long as you trade in this market, chance becomes inevitable, and one day you will encounter a product that will burst as soon as you buy it. If your trading habit is to hold a large or even full position in a single currency, then sooner or later you will encounter a "black swan" event.
The significance of diversified investment is that even in the event of an extreme crash, the loss of principal can be controlled within an acceptable range. For example, if one-third of a currency is invested in a position, even if its price is cut in half, the overall loss of the account is only 15%, which is completely within the acceptable range.
Of course, some people may joke that putting eggs in different baskets and the car overturning is a natural disaster, not a crime of war. All we have to do is to do the best we can control.
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